The U.S. Court of Appeals for the Ninth Circuit recently affirmed a trial court’s summary judgment ruling in favor of the financial services defendants in an action to rescind the mortgage under the federal Truth in Lending Act. In so ruling, the Ninth Circuit held that the plaintiff consumer did not have a right of rescission under TILA, 15 U.S.C. § 1601 et seq., because he previously quitclaimed his interest in the property to his ex-wife, and his new loan to acquire the property from his ex-wife was a “residential mortgage transaction.” A copy of the opinion in Barnes v.…
Posts tagged as “Mortgage Law”
The U.S. Court of Appeals for the Eleventh Circuit recently affirmed the bankruptcy court’s denial of a debtor-borrower’s motion for sanctions, which alleged that her mortgage loan servicer violated her bankruptcy discharge by mailing a communication in a purported attempt to collect upon a discharged debt. In so ruling, the Eleventh Circuit held that the purportedly violative letter, entitled “Informational Statement,” which provided an amount due, due date, and payment instructions, coupled with a disclaimer, did not constitute an unlawful attempt at debt collection, because the servicer had not foreclosed the subject property and the borrower had the option to…
The U.S. Court of Appeals for the Fifth Circuit held that a refinance lender is not entitled to contractual subrogation where it does not have a valid deed of trust. Additionally, the Fifth Circuit certified the question of law to the Supreme Court of Texas regarding whether a lender is entitled to equitable subrogation where it failed to correct a curable constitutional defect in the loan documents under § 50 of the Texas Constitution. A copy of the opinion in Zepeda v. Federal Home Loan Mortgage Corp. is available at: Link to Opinion. In 2007, a borrower took out a…
The Court of Appeal for the Third District of California recently affirmed in part, and reversed in part, an order granting a mortgage servicer’s motion to dismiss several causes of action brought by plaintiff borrowers for denying their requests to modify their mortgage loan. The appellate court affirmed the dismissal as to the borrowers’ counts for breach of contract, negligence, and intentional infliction of emotional distress. However, it also held that the borrowers stated a valid cause of action under California’s Homeowner Bill of Rights, section 2923.6, and reversed as to that claim. Specifically, the appellate court concluded that the servicer’s…
Disagreeing with contrary rulings from the First and Sixth Districts, the California Court of Appeal for the Second District recently affirmed a trial court’s ruling that no duty of care is owed to a borrower during contract negotiations for a mortgage loan modification. A copy of the opinion in Sheen v. Wells Fargo Bank, N.A. is available at: Link to Opinion. In 1998, the plaintiff borrower obtained a $500,000 loan secured by a deed of trust (the “first loan”). The first loan is not at issue. In 2005, the borrower obtained two junior loans from the defendant bank in the amounts $167,820 (the…
The U.S. Court of Appeals for the Sixth Circuit recently affirmed dismissal of a homeowner’s claims under the federal Real Estate Settlement Procedures Act (RESPA), where the homeowner plaintiff only signed the mortgage, but not the note evidencing the loan. The Sixth Circuit’s holding reinforced that a plaintiff who does not have personal obligations under the loan agreement is not a “borrower,” and thus cannot assert claims under RESPA, which extends causes of action only to “borrowers.” A copy of the opinion in Keen v. Helson is available at: Link to Opinion. Husband and wife borrowers took out a loan secured by…
The Supreme Court of Ohio recently held that, although a foreclosure decree did not specify certain amounts of outstanding liens due and owing upon the property, it nevertheless was a final, appealable order that left no issues remaining to be determined as to the rights and liabilities of the parties. The Supreme Court further noted that it was not required to adhere to the law-of-the-case doctrine that was the basis for the appellate court’s contrary ruling pursuant to its prior determination that the foreclosure decree was not a final, appealable order. A copy of the opinion in Farmers State Bank…
The U.S. Court of Appeals for the Eighth Circuit recently affirmed a trial court’s order canceling a lis pendens, finding that the description of the property at issue in the lis pendens was imprecise and did not connect to any particular request for equitable relief as required under Missouri law. A copy of the opinion in Enterprise Financial Group, Inc. v. Podhorn is available at: Link to Opinion. The plaintiff lender extended a $1.9 million loan to an entity that then made alleged fraudulent transfers of the loan proceeds to the defendant company. The defendant used the fraudulently transferred loan proceeds to purchase…
The U.S. Court of Appeals for the First Circuit, on an issue of first impression at the federal appellate level, recently held that the Merrill doctrine – which prevents federal government instrumentalities from being bound by the unauthorized acts of their agents – applies to Federal National Mortgage Association (“Fannie Mae”). Accordingly, the First Circuit affirmed the trial court’s entry of summary judgment in favor of Fannie Mae. A copy of the opinion in Faiella v. Federal National Mortgage Association is available at: Link to Opinion. The plaintiff borrower took out a loan secured by a mortgage on his home. The lender…
The Court of Appeal of the State of California, First Appellate District, recently held that California Civil Code § 2924c permits a borrower to reinstate a modified home mortgage loan by paying only the past due modified payments and associated fees and charges, and that a servicer cannot lawfully condition reinstatement of a loan on the payment of amounts that were deferred in the loan modification. In so ruling, the Appellate Court rejected the servicer’s argument that the loan modification agreement allowed it to nullify the modification upon the borrower’s default and to require payment of the earlier default according…
The Florida District Court of Appeal of the Third District recently reversed the dismissal of a mortgagor’s second amended complaint alleging that the mortgagee’s post-default estoppel letter inflated the amount of legal fees it was entitled to recover. In so ruling, the Appellate Court held that the requirements under Fla. Stat. 701.40 for a mortgagee to deliver a written estoppel letter providing the unpaid balance of the loan and any other charges properly due upon a mortgagor’s request can give rise to a valid cause of action based on the parties’ respective obligations under the statute. A copy of the…
The Supreme Court of California recently held that the anti-deficiency statute in California Code of Civil Procedure § 580d did not bar a creditor holding two deeds of trust on the same property from recovering a deficiency judgment on the junior lien extinguished by a non-judicial foreclosure sale on the senior lien. A copy of the opinion in Black Sky Capital, LLC v. Cobb is available at: Link to Opinion. The bank extended two loans to the borrowers that were secured by deeds of trust on a commercial property. The bank sold both loans to an investor that subsequently foreclosed on the…